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EU slaps record 1-billion-euro fine on Intel
Published in Saudi Press Agency on 13 - 05 - 2009


The European Commission, in a bid to provide
computer buyers with more choice, on Wednesday fined US computer chip
maker Intel a record 1.06 billion euros (1.45 billion dollars) for
bribing retailers and manufacturers to shut its main rival out of the
market, according to dpa.
Intel "used illegal anti-competitive practices to exclude
essentially its only competitor, and thus reduce consumer choice, in
the worldwide market for x86 chips" between 2002 and 2007,
EU Competition Commissioner Neelie Kroes said as she presented the
findings of a lengthy anti-trust investigation.
Intel denied all charges and announced that it would challenge the
fine in the European Court, setting the scene for a potentially
marathon legal battle.
"There has been absolutely zero harm to consumers. Intel will
appeal," Intel chief executive officer Paul Otellini said in a
statement from the company's headquarters in Santa Clara, California.
The commission began probing Intel, the world's biggest chip
maker, in 2001, acting on complaints filed by rival Advanced Micro
Devices (AMD).
The investigation, which included raids on Intel's European base
in southern Germany, revealed that the firm had moved to exclude AMD
by offering computer manufacturers Acer, Dell, Hewlett-Packard,
Lenovo and NEC generous rebates, on condition that they only use its
products.
It also paid manufacturers to delay the launch of products
containing AMD chips and bribed major retailers, such as Germany's
Media Markt, to stop selling rival computers, the commission said.
The penalty imposed on Intel is the largest single fine ever
imposed by the EU on a private company for anti-competitive
practices, smashing the previous record of 899 million euros levied
on US software giant Microsoft in February 2008.
The US Chamber of Commerce, which represents more than 3 million
businesses in the United States, called the penalty part of a
"larger, troubling pattern" and criticized the EU for not giving
Intel enough chance to defend itself.
"Fines by the Commission have escalated in size in recent years,
raising serious concerns about due process and the method for
determining these huge fines," said Myron Brilliant, the chamber's
vice president for international affairs.
However, it is less than a third of the maximum fine the EU could
have imposed, based on a figure of 10 per cent of the company's
annual turnover.
"Intel has harmed millions of European consumers by deliberately
acting to keep competitors out of the market for over five years, the
size of the fine should come as no surprise," Kroes said.
Otellini insisted that the EU's punishment was "wrong" and
"ignores the reality of a highly competitive microprocessor
marketplace."
And Intel's top lawyer, Bruce Sewell, told journalists in Brussels
that the company's incentives had been "matched by AMD at various
times in the past." He also argued that "regulations should not
prevent one company, no matter how large that company is, from
offering discounts or providing incentives."
Commission officials rejected this view, noting that while
incentives can indeed lead to lower prices for consumers, "rebates
that are conditional on buying less of a rival's products, or not
buying them at all, are abusive."
Kroes said Intel must "cease the illegal practices immediately"
and accused the company of going "to great lengths to cover up many
of its anti-competitive actions."
Intel will now be ordered to deposit the fine into a blocked
account until the legal process is completed. The commission,
meanwhile, will monitor Intel to make sure it does not keep breaking
EU competition rules.
"We are confident that the decision will stand up in court,"
Kroes' spokesman Jonathan Todd told the German Press Agency dpa.
The decision was welcomed by consumer groups, with the European
Consumers' Organisation saying buyers had been paying "too much for
their computers because of Intel's anti-competitive practices."
In a statement, AMD said it expected the EU decision to "shift the
power from an abusive monopolist to computer makers, retailers and
above all PC consumers."
Intel is the world's largest chip maker by sales, with annual
revenue totalling 37.6 billion dollars in 2008.
It has already been found guilty of abusing its dominant market
position by regulators in Japan and South Korea.


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